[ET Net News Agency, 4 September 2019] HSBC Global Research lowered its target price
for China Railway Group (CRG)(00390) to HK$8.4 from HK$9 and maintained its "buy" rating.
The research house said CRG reported a weak set of 2Q results which should be slightly
below market expectations. Strong revenue growth was held back by lower gross margin,
higher operating expenses, and higher interest expenses.
Cash outflows from operations in 1H came in at RMB50bn as the company continues to make
capital investments, including in its property business (RMB3bn) and its PPP
(public-private partnership) project business (RMB4.6bn). As a result, net debt to equity
ratio increased significantly to 57% (versus 25% as at December 2018). (KL)